Subaru adding first EV production line to catch up with rivals

TOKYO -- Electric vehicle laggard Subaru Corp. will step up its pace in the battery-car race by adding a dedicated in-house EV assembly plant in Japan from about 2027.

The move is part of a multibillion-dollar investment in electrification over the next five years.

Subaru’s outlay shows the all-wheel drive specialist is finally turning its focus to full-EVs after introducing its first serious contender, the Solterra crossover EV, only this year.

Unlike the Solterra, the EVs produced in the latter half of this decade will be manufactured directly by Subaru.

The Solterra, which shares a Toyota-developed EV platform with the Toyota bZ4X, is made at Toyota’s Motomachi assembly plant on the same line as the sibling nameplate.

Subaru CEO Tomomi Nakamura outlined the plans on Thursday while announcing fiscal year earnings.

Subaru will begin making its own EVs in mixed production with internal combustion vehicles at its Yajima plant in Japan in the mid-2020s. From about 2027, Subaru will build a dedicated EV factory on the site of its Oizumi plant, which now makes engines and transmission.

The EVs made there will be exported globally to markets including the U.S., Nakamura said. Subaru is still contemplating what kind of segment or models the upcoming EVs will be, he added.

Nakamura also declined to offer a production capacity figure for the new EV production facility but said it will start off small with room to expand over time.

Nakamura said the market for EVs has radically changed in just the last year. Even U.S. dealers are starting to clamor for battery electric cars, especially after experiencing the upcoming Solterra.

“Two or three years ago, U.S. retailers were not asking about EVs at all,” Nakamura said.

“But in this last year, it’s suddenly increased.”

Around mid-decade, Subaru will also introduce next-generation hybrid models based on gasoline-electric powertrains provided by Toyota, which owns a 20 percent stake in Subaru.

Subaru will brand its hybrid offerings e-Boxers, in a nod to its horizontally opposed engines.

Subaru said it will invest 250 billion yen ($2.05 billion) over the next five year in the hybrid and EVs initiatives. Subaru wants at least 40 percent of its global sales to come from hybrids and pure EVs by 2030. And in the early 2030s, Subaru plans to electrify all new vehicles sold worldwide.

The Solterra, which went on sale May 12 in Japan, will also be sold in the U.S., Canada, Europe and China. It is the badge-sharing stablemate of the bZ4X and a spitting image of the Toyota, from the oversized wheel cladding and beveled back fender to the funky wraparound taillight motif.

Nakamura said that operating profit fell 12 percent to 90.5 billion yen ($742.4 million) in the fiscal year ended March 31.

Global sales slid 15 percent to 734,000 vehicles as the company felt the pinch of pandemic-related output interruptions and the worldwide semiconductor shortage, the company said in a statement.

Sales in the U.S., Subaru’s biggest and most important market, fell 17 percent to 506,000 units in the 12 months, as production stoppages prevented Subaru from supplying hot demand.

Nakamura said U.S. dealer inventories have shrunk to historical lows of only three or four days.

“We have never had an experience like this,” he said.

Meanwhile, surging raw material and logistics costs further undercut profits over the period.

Looking ahead, however, Subaru predicts a big bounce back in the current fiscal year through March 31, 2023. The automaker sees global sales rebounding 28 percent to 940,000 units.

Operating profit is forecast to more than double to 200.0 billion yen ($1.64 billion), thanks largely to recovering volume and the tailwind of beneficial foreign exchange rates.